Mining stocks declined over 3% even though the moves in gold and the USD Index are not that significant. This makes the short-term outlook even more bearish and at this time we are considering (but nothing more than that so far) increasing the size of the speculative short positions in gold, silver and mining stocks. The weak reaction in miners is not a one-time or one-day event - we discussed that already in the alert, but the size of this phenomenon is increasing, which adds clarity and decreases the risk associated with the short position.

As you may recall, in today’s first alert, we wrote that the USD Index could move a little lower (to about 94 - 94.2) before it reverses and starts rallying again. If we see this move and the precious metals sector once again replies by flashing more sell signals, we’ll most likely increase the size of the short position further. Such a move in the USD Index, would make a reversal and the subsequent rally in the USD much more likely and this accompanied by yet another sell signal in PMs and miners would make the short-term outlook extremely bearish.

Again, that’s just something that may happen and doesn’t have to happen at all, but we wanted to give you an early heads-up.

As always, we’ll keep you informed.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager

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